United States Services Agency vs State of Kerala and Others

Varghese Kalliath, J.—These two original petitions concern the question of levy of tax u/s 3 of the Kerala Motor Vehicles Taxation Act, 1976, for short the Motor Vehicles Taxation Act. The facts of the two cases are almost identical and so these two cases can be disposed of by a common judgment.

We shall now advert to the facts necessary for the disposal of these cases. The Petitioners in both these original petitions are doing the business of loading and unloading the containers/vessels reaching the wharf area in the Cochin Port. The Petitioner in O.P. No. 2365 of 1987 is acting as the agents of Sealand Services incorporated in the United States of America. For facilitating loading and unloading the containers/vessels, the Petitioner is using chasis (trailer), according to the Petitioner, specially designed and adapted for loading and unloading the containers/vessels reaching the Cochin Port. The Principal of the Petitioner in O.P. No. 2365 of 1987 has imported from Roterdam 105 chasis (trailers) for the above said purpose. The Petitioner in O.P. No. 9652 of 1987 got permission from the Central Government and Port authorities to import 55 chassis (trailers) from their Principal, United States lines, which is a shipping company using containers for cargo movement. The said 55 chassis also, according to the Petitioner in O.P. No. 9352 of 1987, are specially designed and adapted for the use of loading and unloading the containers/vessels reaching the Cochin Port. Further, the case of the Petitioner is that these equipments were permitted to be imported to India with an added condition that the same will be re-exported when the Port Trust provides sufficient number of trailers. These trailers in question are, according to the Petitioners, used only in the wharf area.

The Petitioners submit that the wharf area is a private premises. The operation of the trailers, which are specially designed for loading and unloading and the containers/vessels, is confined to wharf area only and that it can be used only for the said purpose. They say that the wharf area is a customs bonded fully enclosed area.

Since the authorities under the Motor Vehicles Act, 1939, for short the M.V. Act, insisted the Petitioners to register these equipments the Petitioners have registered these equipments, u/s 22 and 38 of the Motor Vehicles Act. For all these trailers, the Petitioners have obtained registration certificates and fitness certificates.

The definite case of the Petitioners is that the trailers in question are not motor vehicles within the meaning on the definition of motor vehicle both under Motor Vehicle Act and the Motor Vehicle Taxation Act. Certainly, if these trailers are outside the definition of motor vehicle in the Motor Vehicle Act, they will be outside the definition of motor vehicle under the Motor Vehicle Taxation Act also. We say so because there is no separate definition for motor vehicle in the Motor Vehicle Taxation Act. Section 2(m) of the Motor Vehicle Taxation Act provides that "words and expressions used but not defined in this Act shall have the meanings respectively assigned to them in the Motor Vehicles Act, 1939 (Central Act 4 of 1939) or the Rules made thereunder".

The counsel for the Petitioners submits that the trailers in question are outside the definition of motor vehicle under the Motor Vehicles Act. To substantiate this contention, the Petitioners have given certain factual details regarding the nature and operation of the trailers. They submit that these trailers are pulled by tractors hired by the Petitioners, and operated exclusively in the Port area and the roads within the Port area. Further, the Petitioners submit that the Port area and the roads in the Port area are maintained by the Cochin Port Trust and the roads in the Port area should be considered as private premises or private roads particularly in view of Section 29 of the Major Port Trusts Act. In order to say that these trailers are specially adapted for the specific use of loading and unloading the containers and not adapted for use of public roads, the Petitioner in O.P. 2365 of 1987 has produced a certificate from the Traffic Manager and marked as Ext. P-2. This certificate would show that the trailers owned by the Petitioner are specially designed and adapted for use for loading and unloading the containers/vessels in the wharf area which is a customs bonded fully enclosed area.

The Petitioner in O.P. 2365 of 1987 requested for the issue of certificate of fitness to the 105 trailers belonging to them. They requested that they should not be compelled to take permit for these vehicles for the reason that the vehicles are not used on public roads and not for hire or reward. Ext. P-9 is an order, dated 26th May 1986 by the Joint Regional Transports Officer, Mattancherry. The Joint Regional Tranporsts Officer, it seems, got the matter enquired into by the A.M.V.I, since he has referred to the report of the A.M.V.I. in his order. He has stated that the A.M.V.I., Mattancherry has enquired into the matter and reported that the application of the Petitioner is genuine. Further, Ext. P-9 shows that the Deputy Transport Commissioner (CZ) has agreed that permit is not required for operating such vehicles in private premises other than public place and not for hire or reward provided that the entire roads are maintained by the Cochin Port Trust. It is also said in the order that the Cochin Port Trust by their letter dated 18th January 1986 has stated that the trailers are used only in the wharf area of Cochin Port Trust and on the roads maintained by the Cochin Port Trust. These two exhibits, Ext. P-9 and Ext. P-2, are relied on by the counsel for the Petitioners for establishing the Petitioners'' case regarding the two aspects that the trailers in question are adapted not for use upon roads, that they are specially adapted for the use of loading and unloading the containers/vessels, that the said trailers are used not on public roads and that they are specially adapted for use in enclosed premises.

Counsel for the Petitioners has further referred us to the Major Port Trusts Act to say that the Cochin Port is one of the Major Ports by virtue of Section 1(3) of the Major Port Trusts Act, 1963. He has also referred us to the definition of Port and wharf under Sections 2(q) and 2(za) of the Major Port Trusts Act. He has then referred us to Section 29 of the Major Port Trusts Act, which reads thus:

Transfer of assets of liabilities and Central Government, etc., to Board.- (1) As from the appointed day in relation to any Port.-

(a) all property, assets and funds and all rights to levy rates vested in the Central Government or, as the case may be, any other authority for the purposes of the Port immediately before such day, shall vest in the Board;....

The definition of the wharf u/s 2(za) of the Major Port Trusts Act is,

Wharf, includes any wall or stage and any part of the land or foreshore that may be used for loading or unloading goods, or for the embarkation or disembarkation passengers and any wall enclosing or adjoining the same.

On the abovesaid factual format the Petitioners contened that they are not liable to levy of tax u/s 3 of the M.V.T. Act.

Before the Joint Regional Transport Officer the Petitioners claimed exemption from payment of tax in respect of the trailers in question. Levy of tax was imposed for the period 1979-1986 and when the Petitioners were asked to make payment, they have approached the Joint Regional Transport Officer for exemption from payment of tax. The Joint Regional Transport Officer rejected their application for exemption from payment of tax by the order dated 8th July 1986, copy of which has been produced and marked as Ext. P-11 in O.P. 2365 of 1987. The Joint Regional Transport Officer has considered the case as one u/s 5 of the M.V.T. Act for exemption of tax. The Petitioners pointed out that in the order Ext. P-11 itself, the Joint Regional Transport Officer has stated that all these vehicles are factory built constructed with container frame to carry containers and that the verification, has revealed that these vehicles are in regular use in Cochin Port Trust area for carrying goods in containers immediately after he date of import. Ext. P-12 is the copy of the notice demanding payment of tax. Against Ext. P-11 order, the Petitioner in O.P. 2365 of 1987 filed an appeal before the Deputy Transport Officer who by Ext. P-14 order affirmed the order, Ext. P-11, and dismissed the appeal. A revision was filed against the order Ext. P-14. Transport Commissioner by Ext. P-16 order dismissed the revision on 2nd March 1987.

The Petitioner in O.P. 9652 of 1987 also approached the Joint Regional Transport Officer with the request that the trailers in question are not liable to be taxed. By Ext. P-7 order dated 22nd September 1986 the Joint Regional Transport Officer rejected the application of the Petitioner for exemption from tax. The reasons stated in Ext. P-7 order are just the same as in Ext. P-11. Against Ext. P-7 order, the Petitioner filed an appeal before the Deputy Transport Commissioner, Ernakulam. He has disposed of the appeal confirming the order of the Joint Regional Transport Officer by his order dated 20th January, 1987. The Petitioner filed a revision before the Transport Commissioner. The Transport Commissioner dismissed the revision by his order, Ext. P-12.

The Petitioner in O.P. No. 2365 of 1987 challenges the orders, Exts. P-11, P-12, P-14 and P-16, and the Petitioner in O.P. No. 9652 of 1987 challenges the orders Exts. P-7, P-8, P-10 and P-12.

The Deputy Transport Commissioner, the 3rd Respondent in O.P. 2365 of 1987, has filed a counter-affidavit justifying the levy of tax u/s 3 of the M.V.T. Act. He has referred us to Sections 3 and 5 of the M.V.T. Act, which ran thus:

Levy of tax. - (1) Subject to the other provisions of this Act, on and from the date of commencement of this Act, a tax shall be levied on every motor vehicle used or kept for use in the State, at the rate specified for such vehicle in the schedule:

....

Exemption from tax.- (1) In the case of a motor vehicle which is not intended to be used or kept for use during the first month or the first and second months of a quarter, or the whole of a quarter or year, as the case may be, the registered owner or the person having possession or control of such vehicle shall give previous intimation in writing to the Regional Transport Officer from whom the endorsement for tax has been obtained, that such vehicle would not be used for such period and thereupon, the registered owner or such other person shall not be deemed to have used or kept for use the vehicle for such period, and no tax shall be payable in respect of such vehicle for such period.

....

In para 4 of the counter affidavit the 3rd Respondent has stated that the trailers are being operated on the roads within the Cochin Port Trust area and within the wharf area guarded by the Central Industrial Security Force. It is said that these roads except within wharf area have got public access including the operation of all types of private vehicles. Further, it is seen stated therein that the trailers are designed and adapted for the use of loading and unloading the containers and for lifting the containers from yard to vessels and vessels to yard. It is said that ''these trailers are also designed so that it can carry only bundles, vessels and huge containers forming the unit as a whole as a goods vehicle". The counter-affidavit also discloses that the permit u/s 42(1) of the M.V. Act is required only for the vehicles operating on public roads. In para 6 of the counter-affidavit it is made clear "that as per Ext. P-2, these trailers are certified to be not operating on public roads, permit was not insisted ascertaining the position by the Department". The Respondent has also pleaded in para 9 that "there is no exemption for vehicles from payment of tax which are being used in the wharf area or any other enclosed premises except those vehicles owned by the Government.

The counter-affidavit concludes by saying that the order of the Joint Regional Transport Officer and the dismissal of the appeal by the Deputy Transport Commissioner, Central Zone, and the dismissal of the revision petition by the Transport Commissioner, Trivandrum are correct, legal and in accordance with the provisions of the M.V.T. Act.

The fundamental and principal question that has to be considered in these cases is whether the chassis in question are motor vehicles within the meaning of Section 2(18) of the M.V. Act. We shall approach this question fully bearing in our mind that all that the judges in situations like this can do is to "throw off the wrappings and expose the statute to our view" (vide Cardozo Nature of Judicial process).

The question of interpretation of the definition of motor vehicle has come up for decision before the Supreme Court in Bolani Ores Ltd., and Travancore Tea Estates Co. Ltd. and Others Vs. State of Kerala and Others, . The question was considered by this Court in Harrisons and Crosfield Ltd. v. Kerala State 1971 KLT 643 certainly, the ratio decidendi of these cases have got a real controlling effect in the matter of deciding the case at hand. But we are certain that no decision is always binding as a precedent solely for the logical consideration that similitudes and homogeneities between the facts of the earlier and later cases can be discovered. Both the situations have to be weighed and balanced and then the ratio decidendi must be discerned and should be applied on the facts relating to the two cases on the basis of a legal policy that comprehends the situtions in both the cases. It is difficult to find out this principle of policy as a "finished creature". It is said, "The ratio decidendi of a case often develops its true and full meaning slowly and haltingly and it may take a whole series of decisions involving variations of the situations in the first case until a full blown rule of law, surrounded perhaps by a cluster of exceptions, replaces tentatively and inadequately formulated generalisation found in the initial decision". (Vide Jurisprudence-Philosophy and the method of the Law-Edgar Bodenheimer)

In Bolani Ores Ltd., the Court was considering a question as to whether the Dumpers, Rockers and Tractors used in a mining quary are motor vehicles within the meaning of the relevant State Motor Vehicle Taxation Act and are accordingly taxable thereunder. Before proceeding further, we shall now advert to the definition of motor vehicle in the M.V. Act. Section 2(18) defines a motor vehicle:

Motor vehicle'' means any mechanically propelled vehicle adapted for use upon roads whether the power of propulsion is transmitted thereto from an external or internal source and includes a chassis to which a body has not been attached and a trailer, but does not include a vehicle running upon fixed rails or a vehicle of a special type adapted for use only in a factory or in any other enclosed premises.

The task before us is to construe a fiscal statute. We have no doubt that a taxing provision also should be interpreted "fairly reasonably and in accordance with justice". The principle is clean and clear. This Court is bound to bear in mind in construing a Revenue Act to give a just, fair and reasonable construction to the words used without leaning to one side or the other. A course of complete and plain detachment to one side or the other is the policy. No tax can be imposed on a subject by an Act of the legislature without words which are clear and plain, showing an intention to lay the burden on him who has been asked to pay the tax. The simple stint of the Court, the limited job of the Court, is to construe the provisions of the taxing enactment according to the ordinary and natural meaning of the words used and then to apply that meaning to the facts of the case. If when this process is put in action, the tax payer is brought fairly within the Act; no escape for him, otherwise he goes free. In this process, we should be careful to avoid any straining of language either way.

The counsel for the Petitioners argued that this Court should consider first the question whether the trailers in question are vehicles ''adapted for use upon roads'' so as to determine whether the vehicles in question will come under the first part of the definition. He further said that when the definition mandates that only vehicles that are adapted for use upon roads, it meant to mean only these vehicles which are adapted for the normal use on public roads alone will be encompassed by the definition. In fact, when the counsel for the Petitioners advances this argument, he wants this Court to read into the definition two aspects which are not very clearly stated in the definition, but clearly implicit in the definition to give it a natural and ordinary meaning, namely, ''road'' in the definition means ''public road'' and ''use'' means ''normal use'' at least when the definition is incorporated in a taxing statute. In order to support this argument, counsel for the Petitioner has relied on para 23 of the decision reported in Bolani Ores Ltd., . It reads thus:

The meaning of the word ''adapted'' in Section 2(18) of the Act is itself indicated in entry 57 of List II of the Seventh Schedule to the Constitution, which confers a power on the State to tax vehicles whether propelled mechanically or not and uses the word ''suitable'' in relation to its use on the roads. The words ''adapted for use'' must therefore be construed as ''suitable for use''. At any ''rate'' words ''adapted for use'' cannot be larger in their import by including vehicles which are not ''suitable for use'' on roads. In this sense, the words ''is adapted'' for use have the same connotation as ''is suitable'' or ''is fit'' for use on the roads.

In Travancore Tea Estates Co. Ltd. and Others Vs. State of Kerala and Others, the Supreme Court observed thus:

Section 3 of the impugned Act [Kerala Motor Vehicles Taxation Act (Act 24 of 1963)] provides that a tax ''shall be levied on all motor vehicles used or kept for use in the State''. The Levy is within the competence of the State legislature as entry 57 in List II authorises levy on vehicles suitable for use on roads. It has been laid down by this Court in ''Bolani Ores Ltd. v. Orissa'', that under entry 57 of List II, the power of taxation cannot exceed compensatory nature which must have some nexus with the vehicles using the roads i.e. public roads, If the vehicles do not use the roads, notwithstanding that they are registered under the Act, they cannot be taxed.

From the above two quotes, it is clear that the first part of the definition insists that the vehicle should be suitable for use on the roads and the roads shall be the public roads. The Supreme Court has given emphasis to the fact that the power of taxation under entry 57 of List II of the Constitution cannot exceed compensatory nature and also should have nexus with the vehicles using the roads, i.e. public roads. This is so, because Entry 57 of List II of the Constitution gives power to the State Government to levy taxes on vehicles whether mechanically propelled or not, suitable or use on roads, including tramcars subject to the provisions of entry 35 List III. So, it is clear that when the definition of motor vehicle u/s 2(18) of the M.V. Act mandates that the vehicle should be adapted for use upon roads, the meaning that should be assigned to the words ''adapted for use upon roads'' is ''suitable for use on roads''. When it is suitable for use on roads, it means ''suitable for use on roads in the normal circumstances and not on special or abnormal situation''. Further, it has been noted in the decision reported in Travancore Tea Estates Co. Ltd. and Others Vs. State of Kerala and Others, .

If the words ''used or kept for use in the State'' are construed as used or kept for use on the public roads of the State, the Act would be in conformity with the powers conferred on the State legislature under Entry 57 of List II. If the vehicles are suitable for use on public roads they are liable to be taxed.

We shall now advert to the second part of the definition. To escape from the net of the definition of motor vehicle under the second part of the definition, the vehicle should be of a special type, adapted for use only in a factory or in any other enclosed premises. The emphasis is that the vehicle itself should be adapted for use only in an enclosed premises. The use of the vehicle in an enclosed premises alone will not be sufficient, but it has to be examined whether the vehicle itself is adapted for using it only in a factory or in any other enclosed premises.

Yet another question to be decided is what is an enclosed premises. This has to be decided on the basis of the peculiar features of the place where the vehicles are operated. In Travancore Tea Estates Co. Ltd. and Others Vs. State of Kerala and Others, the Supreme Court has made it clear that if the vehicles are not used on public roads, they are entitled to exemption from the levy of tax under the Kerala Motor Vehicles Taxation Act. In that case, the Supreme Court has said that the authorities proceeded on the basis that even assuming that the vehicles were not intended to be used on the public roads, they are liable to be taxed. In this view, the Appellant did not apply for exemption or notify the non-user as required under the provisions of the M.V.T. Act. But, on the facts and circumstances of the case, it is clear that the Appellant claimed exemption from tax on the ground that it was not being used on public roads. Finally, the Supreme Court, in the peculiar circumstances, held that though, in terms, the requirements of Sections 3 and 5 of the M.V.T. Act have not been complied with, in fact, the requirements have been satisfied as the dispute proceeded throughout on that basis and so the Court directed an enquiry as to whether the vehicles have been used during the relevant period on public road or not.

In view of the discussions we have made above, we feel that the authorities have not considered the question in the proper perspective. The authorities have to decide primarily the question whether the vehicles in question will come under the definition of Section 2(18) of the M.V. Act and in that process the authorities have to consider whether the vehicles adapted for use upon roads should be understood as suitable for use on roads. The test that can be applied is whether a reasonable person looking at the vehicle would say that it is suitable for normal use on the roads. The definition of the word ''motor vehicle'' has to be understood to refer only to vehicles which are reasonably suitable for the road in the sense that an average man could think that the plying of the vehicles on the road would be one of the normal user of the vehicle. That seems to be the test of suitability. Definitely, "It cannot be read to mean ''actually used on the roads''. If it cannot be used as a vehicle that could be put on the roads in the normal course it is not a motor vehicle. That it is not so used on the roads but is used only in certain factory premises makes no difference as it nevertheless has the potential to be used as a vehicle on the road". (Vide 1971 KLT 643). Further, the authorities have to consider whether the vehicles in question are specially adapted for use in an enclosed premises. In this context, it is also necessary to consider whether the premises in question is an enclosed premises. Certainly, it is also necessary to find out whether the vehicles are used on public roads or not, Since the authorities have not answered these relevant aspects of the matter, we feel that the orders impugned have to be quashed.

The fact that the vehicles are all registered under the M.V. Act is of no moment for the purpose of levy of tax, if the relevant aspects we have catalogued above do not suggest that the vehicles in question are not motor vehicles liable to be taxed. In Travancore Tea Estates Co. Ltd. and Others Vs. State of Kerala and Others, the Supreme Court has said clearly that if the vehicles do not use the road notwithstanding that they are registered under the M.V. Act, they cannot be taxed.

In the result, the orders impugned in both the original petitions are quashed. We direct the Joint Regional Transport Officer to consider the question of liability for tax on the basis of the observations we have made in this judgment.